resolved there. in the meantime, it's the cat versus cag debate that also needs to be resolved. always a bull market somewhere. trust me on "mad money." i'm jim cramer, and i will see you tomorrow! some of the actions they've taken over the last few weeks present a real and clear danger. >> and there you have it. new defense secretary chuck hagel calls the provocative actions by north korea a serious threat. good evening, everybody. i'm brian sullivan in for larry this evening. and this is "the kudlow report." north korea's the top international and financial story tonight. that rogue nation rattles the markets with more hostile action and belligerent threats. the u.s. is now forced to protect its interests and will send a sophisticated missile defense system to nearby guam. all this along with a weaker than expected private payroll report led to a triple-digit loss for the dow. also tonight, why is the obama administration seemingly trying

to repeat our old mistakes? a new report says the white house pushing hard to get more people loans for homes that have lower incomes and lower credit scores. isn't that how we got into the financial mess five years ago? and the president's other big push today. the one for more gun control. is back on. with a trip to denver. he is calling for more background checks to stop gun violence. but here's the thing. it is generally not the people who actually undergo background checks that we have to worry about. "the kudlow report" starts right now. all right. welcome back. a lot to do tonight. but first up, breaking news in the escalating tension with north korea. defense secretary chuck hagel saying today that north korea poses a real and clear danger. and in response to the country's recent blustery war rhetoric the u.s. is now sending an advanced

missile defense system to asia to defend military bases in the pacific. nbc's jim mace dah joining us from seoul, south korea with the very latest. jim? >> reporter: hello there. well, if you ask experts here what kind of signs worry them, they will almost always mention the shutting down of the kaesong industrial park. it's just industry north korea. the only north and south korean joint venture. and a bellwether over the past decade or so of north-south relations. well, when the morning shift change of south korean managers and truck drivers was to take place this morning at the border, they were told in so many words to go home. meanwhile, some 800 south koreans inside the industrial park opted to stay there to watch over their businesses, and they're still there tonight. so this has clearly ratcheted up the tension in an already tense environment. and if that weren't enough, it comes just a day after kim jong un declared that he was

reactivating that old mothballed yurk reactor in yongbyon not just for its electricity, which they desperately need, but to beef up his nuclear weapons building as well. he was quite clear about that. this was for bomb making. experts now are saying that both of those gestures are really meant to scare south koreans and the united states into new rounds of talks and concessions for north korea. but i'll tell you, there's certainly much more anxiety here tonight in seoul. i'm jim maceda, nbc news. now back to you. >> our thanks to jim maceda. meantime, the stock market took a hit today, spooked in part by those growing tensions with north korea. so just what kind of fallout will this volatile and dangerous situation have on your money? and should america consider pre-emptive military action? here now, retired four-star general and former nato supreme allied commander wesley clark. also with us for the market's angle, abigail doolittle, equity strategist at the sea group. and brian kelly, co-founder of

shelter harbor capital. how serious should we take these threats? >> i think you have to take them seriously. they're spoken. they're a nuclear power. they do have long-range missiles. they have a lot of special forces people. they could do something. they also have chemical weapons. and we have to believe probably biological weapons as well. so yes, you take it seriously. but so far as we've been told publicly, there are no signs of the kinds of troop movements and troop mobilizations yet, that would actually give us a sense that they're about to strike. it's been rhetoric, rhetoric, and rhetoric. it's been escalation, escalat n escalation, escalation. so it sounds like it isn't -- it's designed to intimidate the south. it's designed to provoke a reaction. it's design ed possibly to facilitate more concessions or maybe even as part of an opening

gambit to split apart u.s.-south korean alliance. and give north korea some decided diplomatic advantage on the peninsula. >> how would you handle it militarily right now? >> well, you've got to handle it militarily, diplomatically, and politically. so you've got to maintain calm in the united states and around the world. you've got to make sure your own forces are on adequate alert to take the necessary actions to defend in case you're attacked. you've got to get your reconnaissance and intelligence and surveillance as tuned to this as possible. and you've got to work with the allies in the region. japan and south korea. so they're ready. and you've got to talk to china. >> that's it. china. where are they in all of this? i know there's back channel communication going on. perhaps pyongyang's closest ally is beijing. china also needs us economically. do you believe that china is working hard behind the scenes to try to defuse this?

>> i don't have enough information to really make the judgment right now. i know that china has said a couple of sentences that indicate this is trouble. but i think the broader perspective of the chinese view would be that they'd like to have the united states and its forces out of south korea. they're not sure about japan because they don't want japan to nuclearize. but they definitely don't want a unified korea that's aligned with the united states. and there could be in this case some way of using this crisis to suggest that it's the fault of the united states, the military maneuvers, the alliance, that the tension is our fault, that if we would simply leave, let china handle this, they can take care of things. that's what you have to keep an eye on strategically, because that's what would best serve china's interest. using the saber rattling by the north to break apart the u.s.

and south korean presence in the south, our alliance, and then let all of korea fall under china's concerns and control. >> north korea's typically wanted something when they rattle their saber, right? food, money, fuel. >> sure. >> do you think they want something this time? and if they did, should we give it to them just to e. did fuse the situation? >> i think that's run its course. i think it's unlikely we're going to give them -- we've given them food. we've given them fuel. we at one time promised them two nuclear reactors if they got rid of yongbyon. we've been through all that. we understand that's not what this is about. this is a regime that doesn't mind punishing its own people. it's got enough to take care of its own key leaders. and the rest it doesn't care about. so this is part of another strategy. we've got a new leader in there. and he's probably working with china. it's a new strategy. >> let me ask you a different question before we get to our

markets guests here. and thank you guys for being so patient. which is this. i read a book last year called "the reluctant communist," about a u.s. soldier who defected thinking he'd be sold back to the russians and come back here but he wouldn't die in the korean war. instead he was kept as a political prisoner and sort of demonstration peace for 40 years. real insight into north korea. he now lives in japan. do you believe that the north korean people actually support kim jong un? would the army actually back him up if something were to come? >> yeah. i do believe that. at least initially. now, it might be very brittle support. but i would not believe that that army would immediately turn on him. if they took a couple sharp reverses, if the office -- >> like the iraqis in '90 in a way. you had many deserters who put down their gun, who said we're not going to die for saddam hussein. >> you might have some. but the republican guard didn't do that. in fact, a lot of the iraqi forces during the gulf war were maneuvering across the front of

the american hammer as it came around on the left hook. and so we engaged them in this big nighttime tank battle that nobody has ever heard about because we didn't want any press with us in 1990. so they were actually prepared to fight. now, when it came to the actual fight, they didn't have the skills to do it, and we blew through them, and our forces didn't even realize what they were doing. in the case of north korea they've got lots of artillery prepositioned. it's in range of not only the dmz but of seoul itself. they've got lots of special forces. they're highly indoctrinated. just to put a couple hundred thousand people in south korean uniforms, if only 50,000 run around and shoot people, you've got panic and pandemonium behind the lines. so it's a really uncertain situation. we'd like to think that we would be able to break the will of that military quickly.

but you cannot build war plans on that assumption. >> general, we're going to move on to the markets angle. but i know you're a successful business guy. you probably have some investments as well. so if you feel like jumping into the markets discussion, please do so. i'm not telling a general what to do. abigail, let's start off with you ladies first in the markets panel anyway. general. listen, the market fell today. but it didn't collapse. the dow wasn't down 500. even with these threats from north korea. how come? >> you know, brian, i think that these threats from north korea, it offers one more piece of uncertainty for investors. it could rattle the confidence of investors in the future, but there's nothing definitive here. i think that what we're seeing right now, this volatility in the market, it's been building for weeks now. we basically have this fragile anemic recovery on the one hand. we also have an untrusted rally. and over the last three or four years this has led to these 10% whipsaws up and down. i think we're about to enter into a 10% decline for the risk assets. we've already seen that in the shanghai composite. we've seen that in copper. the transports and the small caps have really started to sell

off this week. i think that north korea, if it escalated, could cause a correction. i think it could also shift the semantics of the situation. rather than people calling it a round of risk off we could see a flight to safety as the treasuries rally today. >> brian, what do you i? do you agree, a 10% correction is coming? >> i think that's reasonable. certainly. i've been bearish for the last couple of weeks and it's been a little painful as we've hit new highs. by mean -- >> mom and pop with their 401(k) would think that a 10% drop might be unreasonable. >> it may be unreasonable, and they should be concerned. not necessarily -- i wasn't that concerned about north korea today. and if you look at how the markets traded, i don't think they were that concerned. when you look at e.w. wyatt, which is the south korean etf, it was down .9% along the lines of every other market. sought the market didn't tell you that was concerned. after listening to the general's analysis, i think the market may reevaluate that and think what china's going to do. but the bigger threat to the market is europe. people are too complacent about europe. the economies there are cratering. they probably get worse as we go

on. and that's 25% to 30% of the global -- >> and i want to come in on that because i just came in from europe. and there is a lot of concern over there. first of all, the cyprus situation has rattled people. you know, that wasn't just cyprus. that's a precedent. and the dutch finance minister said it, and then he retracted it, but to europeans who've seen this over some period of time they know their money's not safe. a lot of that money is coming out of europe -- >> and coming here. >> -- and it's coming here. now, it hasn't all made it into the market. but in terms of exports and the european economies, they're in trouble. even the german economy slowed down now. they need those nations around them that they're always criticizing as markets. when they don't have them as markets, they're going to suffer. >> and if we see a headline that says kim jong un is take over as head of the ecb, that would have me nervous. not sure it will happen. general, abigail, brian, thank you very much. i know many of you are returning later on in the show. all right. up next, housing deja vu all over again. washington wants to make it easier for people with weak

credit to buy a home. is that a good idea? a recipe for a housing bust part two? and later on, the president back on the gun control campaign trail. it's all about more background checks now. and the president still pushing this rather disputable claim. >> why wouldn't you want to make it more difficult for a dangerous criminal to get his or her hands on a gun? why wouldn't you want to close the loophole that allows too many criminals to buy a gun without even the simplest of background checks? why on earth wouldn't you want to make it easier rather than harder for law enforcement to do their job? >> we're going to take a closer look at some of those claims that have been put under the microscope by the "washington post" fact checker column. and do not forget, larry kudlow's creed, folks. free market capitalism is the best path to prosperity. you know it by heart. we're going to a break. we'll be back with more after this.

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the obama administration is pushing for banks to make home loans available to americans with weaker credit. cnbc's eamon javers joining us

now with more of the details. eamon? >> good evening, brian. the "washington post" reported this story this morning. let me walk you through the details of what they say is a campaign by obama administration officials to push banks to loosen their lending standards when it comes to home mortgages. the "post" saying that the obama administration wants those banks to begin to lend again post-crisis. they say they've ratcheted the standards up too high and they want the banks to use those taxpayer-backed programs that enable them to do it and they're also urging the department of justice to reassure banks they won't be subject to prosecution or investigation if they move toward lending to people with lower credit scores. apparently, obama administration officials now feeling that some of the bank loan requirements of 20% down and near pristine credit scores are too high and that's hurting the housing recovery as a lot of people just simply can't get credit in this market. and brian, i've got to tell you, the interesting thing about this story is the reaction to it. you could get almost nobody to talk about this today in

washington. it's extremely controversial. there are some critics who worry that this is going to be a pushback to the lower standards that got us into the economic collapse in the first place. of course, defenders of this approach will say you know what? we've simply gone foo far, the pendulum has gone too far, the standards are too high and they're hurting the recovery. >> eamon javers, thank you so much. so is this a good idea that will hurt those less fortunate or is it sub par crisis part two? joining us on set real estate mogul don peebles, chairman and crest peebles corporation. former white house aide keith boykin. and brian kelly's still around. ed, i know where you fall on this because we've talked many times. you think this is an absolutely terrible idea. how come? >> it's a terrible idea because let me translate for you. what they're talking about is making loans to people with 580, 590, 600 ficos, under fha's

guidelines that they will approve using their automated underwriting system. those borrowers have a 1 in 4 chance of going into foreclosure under any sort of actuarial look at what the risks are. 1 in 4 charns. this is subprime 2.0 is what they're pushing here. and the lenders have every right to be scared about this. and to be fearful of what this will do. it will be terrible for their customers. and it would be terrible because they know the government's going to come back and put the blame on them as they did in subprime 1.0. so that's what's going on here. it's the same groups that brought us subprime 1.0 have been planning this for the last few years. i wrote an article a few years ago that was dubbed "subprime 2.0 coming to a neighborhood near you" and it laid out how this was going to happen over the next few years, and here it is, the next step in the process. >> you know, don, i know we want to help people achieve the dream of home ownership, but is giving a loan to somebody with a 570

credit score a good idea? >> actually, that's not exactly what's being talked about. for example, right now today people with a credit score of 620 to 680 out of 800, by the way, so that's like a c-plus average there -- >> the average is about 690. that's what's floating around. >> 620 to 680, 90% of them are turned down across the board. now, we're not having machines make these loans. what's happening is we've become such an automated process here and the banks are afraid to take any risks. right now we're not looking at whether or not they're currently paying the mortgage payment, have he had had a history of for the last five to seven years paying their mortgage payment on time, or did they lose their job, have some difficulty but stuck it out, got a new job, now performing? we need to make individual decisions. i think that's what the individual's saying. make individual decisions, do your job. and in addition, these banks got -- these financial institutions got half a trillion dollars of taxpayer money. and that's from people with

credit scores of 580. that's people with credit scores of 780. sought reality is they've gotten a tremendous benefit. they're making record profits. and they don't have to make anything other than prime loans. the pendulum has swung from one extreme to the other. >> i agree with that. here's the thing. we can agree the bank bailouts were a bad idea, good idea. whatever you want to argue. but if someone loses their home that has an fha-backed loan, much of that obligation is going to fall on you and you, don, and brian and the taxpayers out there. >> but we're already accepting an obligation right now because the economy is weak in part because of the housing market. the housing market is just now starting to recover. and if you can get more people into homes, people can afford and pay for their homes. it's not a bad thing. particularly don made a good point about people with relatively good credit scores. even people with 780 credit scores, almost the top you can get, 30% of those people with 780 credit scores have been denied in the past five years. so the pendulum has swung so far to the other extreme, there has

to be some balance in what we do. >> brian, let's get some facts here. talk about this is a c-plus. the median credit score in the united states is 720. so a 620, 640 fico score is not a c-plus. it's not a c-minus. it's a d. and that's number one. number two, we have a housing finance market today that the federal government takes 90% of all the credit risk that we have half of all the home buyers that get mortgages have a down payment that rounds to zero. half of all the home buyers getting a home mortgage today to buy a house rounds to zero. the federal government has pushed interest rates to the lowest level in 100 years, and the fed as was mentioned earlier is buying $85 million a month in assets, mostly mortgage-backed securities. they're the biggest investor in mortgage-backed securities in the world. that is not the sign of a healthy market. >> but it's not surprising that this is actually happening because you just mentioned the fed buying the mortgage-backed

securities. eventually they're going to run out of assets to buy. so you need to create more assets. the problem with this plan is you've taken away the risk-taking abilities of the bank. so you're not going to have a market like you used to have because nobody's going to want to take the risk. nobody can -- >> but to don's point, the banks have swung maybe too far the other way. >> basically, they don't have to take a risk. they're getting basically zero cost of their capital. they can make margin -- they make their margins on making very prime loans. the reality is also the market is coming back. cnbs markets for commercial mortgage-backed securities, that market's coming back. there's billions of dollars every month now being done in that sector. >> but that's coming back mostly for investors and people who have high credit scores. how do you get the people who have relatively good credit scores but who are first-time home buyers, how do you get those people back into the market? and that's part of expanding the american dream. that's really the next question. i don't think we've gotten to that. >> that's a question not for this panel because i'm getting the wrap in my ear. if you could make your final point. >> i think we have to look at

each individual borrower under the current circumstances after a historic recession. people who lost their jobs bounced back and have resumed payments and are gainfully employed and acting responsibly, and their credit scores suffered due to this economy. they shouldn't be locked out of this market. >> don, thank you very much. ed pinto, thank you very much. i know that brian and keith, you guys are going to stick around. up next, a brand new tesla, right? a $100,000 car. for $500 a month with no money down? sounds like the housing market. we're hoping to rev up sales for the high-end car, at least tesla is. they're unveiling new financing. but is it really just fuzzy math that's a little too good to be true? we'll dig in. i'm telling you right now, the girl back at home

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tesla wants you to buy its luxury model s sedan. bad.d. how bad? the company unveiling a new financing program to make the price of the electric car more appealing for the mass market. by the way, tesla shares up 20% year to date. but is this new financing plan maybe flawed a little bit with some fuzzy math? phil lebeau is live in chicago. with more. >> brian, lots of talk about how tesla came up with its calculation of the effective cost for owning a model s at roughly $500 a month. here's the math according to tesla. depending which state you live in you're going to get an ev incentive, $53 a month is what you're going to save. not paying $5 a gallon for a gas-powered vehicle saves you $284 a month. if you use the model s for

business, there's another $227 you're going to be saving. and then tesla says you will save money by using the carpool or not having to look for a gas station and filling up your old gas-powered car. they say it's $100 an hour. that brings your monthly savings to $851. you take that off of what the payment is every month, which is $1,320, and you come up with $469. that is the net effective cost according to tesla for owning a model s. remember, tesla is not saying that you're going to be writing a check every month for just $469. they're saying that your effective cost over time when you factor in the savings will be under $500. brian, that's the math behind the it isla model s financing. back to you. >> phil lebeau, car guru and now math wiz. thank you very much. up next, the president back on the gun control campaign trail today. and at this point it is all about expanding background checks. nearly everything else off the table. but is the existing background check system really all that

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7:31 p.m. here in the east already. halfway through this "kudlow operator." time does fly when you're having fun. i'm brian sullivan in for larry this half hour. still, more north korea. the continued threats now leading to an american response. that helped push stocks down. there's also talk of more

sanctions even though all the existing economic sanctions clearly haven't done anything. and a big blow nor wind energy and not the good kind. bp making a move that again shows just how hard it is to make money in alternative energy. but first up, president obama in colorado today to bring attention to that state's newly passed gun control laws and to push for more background checks. let's get the latest details on that story from cnbc contributor robert costa of the national review. robert? >> there's a real battle brewing in washington. nra versus the white house. but the real policy that's on the line is background checks. an assault weapon ban, it seems like it's not coming here on capitol hill. what the president's pushing for is universal background checks. but the nra's fighting hard. doesn't seem like it's going to happen. >> listen. i know the nra forever, robert, has been about -- against the fear of what they would call a national gun registry. is there anything more specific in their concerns, however? >> not really.

that's a great point. the nra is very concerned that if universal background checks are passed eventually there will be a federal gun registry and they have a lot of concerns about how those records would be kept, who would have access to those who are gun owners. so that's really the nra's point when they're pinholing republicans and democrats here on capitol hill. they're asking them to not support it because it goes against second amendment rights and the ability for someone to have a gun and not be hassled by the government. >> you know, when we tend to think of the nra as primarily a republican-based organization. is that a fair statement, robert? >> no, it's not. because yes, it's very much based -- it's very much popular with republicans, but the real snag for the president right now is red state democrats. people like mark pryor of arkansas, mark begich from alaska. these are senators who come from red states, conservative states with many gun owners, and they're the ones who are pushing harry reid in the senate to not really move forward on again control because they're wary with so many gun owners in their state about the political viability of that kind of agenda.

>> robert costa. robert, thank you very much. in the meantime, another provision of the senate's gun control bill stating increased penalties on so-called straw purchases, buying for somebody else, is in jeopardy. today the assault weapons and high capacity magazine bans are already out of the bill, which basically leaves just expanded background checks. but when only fractions of gun crimes are traced back to the documented owner of the gun used in the crime, is that really the solution? we're joined now by nationally syndicated radio talk show host lars larsen and kelly ann conway, ceo of the polling company. keith boykin still here. increased background checks the answer? >> not necessarily. and i don't think it's the answer in the united states senate, where really obama's and feinstein's view of gun control is falling apart. it's starting to become a little political and cynical for my taste because he knows his democratically controlled senate does not have the votes. he knows the senate majority leader harry reid counts on legal, lawful gun owners for his narrow re-elections every six

years. he knows senators like mary landrieu in louisiana, mark pryor in arkansas are never going to vote for this and are going to be angry if it's put up to a vote because they very well may use. but let me say this. you said very few. the number actually that we see in the press is 4%. 4% of all gun-related crimes are traced back to their actual owners. the problem for the president's statistics is he keeps using this 40% statistic that has been discredited including by the "washington post" today, and he repeats it and repeats it. kirsten jill brande said it recently. michael bloomberg said it. it's based on a 20-year-old poll and the duke university professor who presided over that poll was asked by politifact said do you think this is right? he said i have no idea, it's a 20-year-old poll. it's a sample of 250 people, which is a small wedding where -- >> you're confusing statistics here. >> no, the president is. >> the 40-4% number that robert was mentioning or brian was mentioning earlier, that was a number that had to got number of

guns traced back to their owners. 409% number is a different number that has to do with the background checks. >> is a false number of background checks. >> regardless of whether it's false or not -- >> regardregardless? it's false. >> it's a different number. it's a different statistic. you're make a mistake in -- >> let me make my substantive point, which is this. this is not the president's gun control issue. this is the american people's issue. it's about gun violence. it's happening not only in newtown, in colorado but other places. and 90% of the american people support this. and shame on congress that they're not willing to do what their constituents tell them to do. yes, the nra is incredibly powerful and influential. and they're the reasons why both democrats and republicans have shown absolute cowardice in pushing forward what the american people want. >> but lars, do you think 90% of the people support background checks, but do 90% of the people support the government knowing that they own a gun? they're different things. >> no. and here's the flaw in all of this argument and the reason the 40% number, which is flawed, i agree, is important. if we have very small numbers of guns that are ending up in the

hands of criminals and murderers that are coming from private purchases, then there is no reason to do these private background checks on private sales. the reason you can't know how many private sales are going on in america is because they're private. think about it. if i sold a gun to you, if you sold a gun to me, or if you take the gun and sell it to somebody else, the only way for the government to know about that is through that gun registry. the number one, it's a bad idea. number two, it's -- >> but lars -- >> hold on, keith. let me take the other side, lars. for 35 bucks i can find out everything about a car that i may want to buy if it's used. why should i know more about a car than about the national firearm market? >> well, first of all, cars aren't in the constitution. and second, if there was some efficacy to a background check or registry system, canada tried this for a decade. it cost them $8 billion. they decided, and they're culturally similar to us. they decided after a decade it didn't do any good.

it didn't solve crimes. it didn't stop crimes. but what it does do is put americans who are simply exercising constitutional rights into a national registry that the government has control of. and it's a ridiculous way to try to solve this problem. the president knows that fewer than 300 of these murders two years ago in the most recent numbers that are available were committed with rifles. yet he wants to have background checks. he wants to ban rifles and he wants to have background checks on the sale of pistols. >> lars -- >> the fact is that this -- >> lars, let's -- >> background checks do not solve the problem. >> first of all in terms of the constitution, the constitution doesn't protect your right to bear an assault rifle. >> it does. >> it doesn't. there's no point even debating that because it's clearly not in there just like you don't have a right to a nuclear weapon o'either or -- >> read heller. >> heller says you don't have a right to a machine gun. >> you know, brian, i can knock these armths down inguments dow second. >> we'll do that later. but my major point here is that the american people, 90% of the

american people want this. so you're basically telling 90% of the american people that they don't have the right to have their lawmakers at least vote on the issue. we just -- >> kellyann, go ahead. >> 90% of the democrats in the senate don't want it. that's why it won't pass. >> they don't -- the american people are more important than the nra. >> why are we arguing about this issue? and the real issue beef already avoided. we've already talked about what they will talk an assault rifle. which is really a misnomer. i'm doing a documentary on the ar-15. it does not stand for assault rifle. it stands for armalight, which is the company that invented the gun. it's just a .22 rifle, one pull, one shoot. but as a virginia tech graduate. okay? kellyann. when i look at what happened at my beloved college. right? there's a lot of talk now on mental health issues. >> not by the president. >> can we support more on that side? >> absolutely. brian, what else was the newtown -- >> no. >> hold on. let me just say this.

none of us want aurora happening, none of us want newtown. none of us want virginia tech. i'm a mother of four small children. i get this completely. i share the unspeakable grief. let me just say that i've yet to hear anybody credibly and non-politically show us how background checks or these bans would have stopped newtown or aurora where the president was today. this guy in newtown was surrounded by a legally obtained and housed arsenal. he played video games all day in the basement. the people around him didn't get him the help he needed. he had a mental illness that went unchecked and untreated. >> lars, you're even against -- lars, what's your problem with that? kellyann makes a good point. why not more on that side of the story? >> well, i am in favor of background checks. but here's why you can't get them passed. that's what i was responding to. hipaa basically locked up people's mental health records and those mental health records are not being shared with the system. i just talked to tom imperati, a gun salesman in connecticut. he owns a gun store for 30 years.

he sold a gone a nut one time. he didn't know she was a nut. the state knew she was a nut. and the hipaa laws kept him from knowing. so he sold her a rifle and she went home and murdered her child with it. the state and the government are the biggest problem here by locking up these records. >> you're making an argument that basically the system is imperfect. we understand that. but we have to take some steps -- >> not imperfect. it is locked up. by the very rules you're asking for. >> we have to take some steps in order to keep guns out of the hands of people who shouldn't have them. criminals and people who have mental health problems. if we can't at least agree on that, we're not even basically -- >> we are agreeing with that -- >> lars, we have to go. but keith, my only issue with that is with 300 million guns in this country already, many filed down, now they're actually making what they call the receiver, the trigger and handle part of the gun out of 3-d printers which are untraceable. i went out and met the kid that's leading this. i shot the gun that he made from this receiver. guns are soon going to be completely untraceable. background checks probably won't do a thing because everyone's buying them out of the back of a

truck. we're now going to make them -- >> 600,000 guns -- >> you have to try to do what you can to keep guns out of the hands of people who -- >> agreed. >> that's basic law enforcement. >> enforce the law. >> lars, thank you very much. by the way, i referenced it a few times. it's my first time i mentioned it so far, the last two months working on an original cnbc documentary. it's called "meringue's gun: the rise of the ar-15." i've been toto a gun manufacturer, in the woods of tennessee. i've talked to responsible gun owners. i've talked to the kid cody wilson trying to make these guns out of 3-d printers. we'll hear from both sides. last week i was in aurora with a girl that was shot numerous times in the movie theater, lost 40 units of blood, survived. we reunited her with the e.r. surgeon that was the first responder to her with the paramedic. powerful stuff. that documentary, folks, will premiere april 25th, 10:00 eastern time. all right. right now bp's biggest foray into alternative energy is

literally about to be gone with the wind. we're going to have a lot more on that story and your top headlines, coming up.

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remember about five or six years ago when bp launched the pricey ad campaign boasting about all of its green energy projects. my, how times have changed. cnbc's brian schactman joining us with that story. brian? >> good evening, brian sullivan. >> thank you, brian schactman. >> thank you very much, brian sullivan. >> it's a b.s. fest. >> i'm trying to minimize that. you're doing just fine on your own. listen, let's get to some news. the fed could be cutting back on its bond-buying program this summer if the economy continues to improve. that according to san francisco fed president john williams. the fed of course currently buying $85 billion in treasuries and mortgage-backed securities each and every month. and now to that bp story that brian talked about. it's known for its slogan "beyond petroleum." it's now going back to just petroleum and getting out of the wind business. the company reportedly selling shares in 16 operating wind farms and nine states. assets worth as much as $3.1

million. those not making money. the top entertainment story, it's official. nbc's "tonight show" will soon be moving back to new york city. cnbc's julia boorstin has more. julia? >> thanks, brian. after 22 years jay leno is leaving "the tonight show." and will be replaced by jimmy fallon. when the hand-off happens next february around the winter olympics, "the tonight show" will return to new york city and will be executive produced by "saturday night live's" lorne michaels. leno is leaving around six months before his contract expires. nbc saying launching fallon's new show during the olympics should give him a big audience for his debut. the news has been speculated about for weeks, but the transition is coming a bit earlier than expected. brian, back over to you. >> thanks, julia. attention taxpayers. president obama paying us back. well, at least sort of. the white house says the president will return 5% of his salary in solidarity with federal workers that have been furloughed because of the sequester. of course those spending cuts have cut in just about everywhere. the president makes $400,000 a

year. so a 5% cut amounts to a little less than $1,700 a month. the white house may be closed for public tours, supposedly because of the sequester, but it's still open for star-studded galas. the white house saying it will host al green, ben harper, justin timberlake, and others for a concert celebrating memphis soul later this month. so much for those spending cuts. although i would like to be a fly on the wall for that show. >> ben harper rules, by the way. faded, fantastic songs. got a new bleus album. fantastic guy. married to laura linney. >> really? i didn't know that. >> yeah. brian harper married to laura linney. >> brian knows so much about things we know so little about. >> do you know why? because i watch cnbc. let's talk about some of these stories. got keith with us, kellyann. let's go. keith, one of those stories brian hit on really moved your markets. >> i want to see congress take a 5% pay cut. since especially the republicans in congress keep talking about we need to have more spending cuts -- >> why not pay congress more to get better people in there? we lose good people to the private sector sector. >> they're the ones who say --

>> every single kud lowe viewer just turned the channel. >> that would increase government spending. exactly. i think we should cut congressional salaries, cut their staffs. >> come on. cut their staffs? >> yeah, cut their staffs. and make them -- >> as opposed to the bow weevil mating ritual research in -- >> bow weevils need love too. >> if we all took a 5% haircut across america it would be fine. >> i have. i live in new jersey. my wife is successful. believe me, we've taken more than a 5% pay cut with federal and -- >> across the board wen titlements -- >> what are you rolling in dough so much? >> for the middle class to suffer and congress doesn't have to pay anything. >> wait a second. hold on. congressional salaries are what? do you know? they're still in the low 200 and -- >> something like that. >> under obama's own tax policy congressmen are not rich but he is because he makes $400,000 a year. so he's subject to his own onerous tax on the rich which really hit people at $250,000.

he's already giving more than 5%. it is such -- >> what's your point? >> the point is -- >> i don't get it. >> the point is you want to cut the salaries of people who aren't even rich under obama -- >> i'm not saying -- >> it was supposed to be a little more lighthearted. let's bring back -- >> it's so ridiculous -- >> this is not "the kudlow report." this is the kindness hour. i'm sitting here. so it's the embraceable hour. >> do you guys think anyone will ever make money off solar? that's one thing i want to know. >> i'm literally getting threats of being fired. they're actually saying this is your last show ever, sullivan. you stink. schactman, thank you. back to the stop top story. it is a serious story. the u.s. now calls the nuclear threat from north korea clear and real. but guess what? some of our allies are calling for more economic sanctions. that's even though north korea has been under some of the harshest sanctions for years. maybe this is the kind of new sanction they're talking about. >> what do you intend to do, sir? delta's already on the probation. >> they are?

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all right. back to our and your top story of the night and the growing international tensions with north korea. defense secretary chuck hagel saying today north korea poses a "real and clear danger" for us and our allies. will this escalating situation in the pacific prove a major

headache for the obama administration? we're back with keith boykin and kellyannconway. keith, listen, some people have taken to social media today to slam the president a little bit saying listen, gun control's a big issue but he needs to be focused right now on north korea and not flying to denver. your thoughts. >> i think he's doing both. gun control is a huge issue and so is the north korean situation. chuck hagel has already made a statement about it today, defense secretary. but i think that the problem with north korea is this has been unstable for years now. this is not just in the past years of the obama administration. and the bush administration had to deal with this before. the clinton administration had to deal with them. we don't really have an answer because this is an unstable government with an untested, untried dictator who's 29 years old. >> and here's my problem, kellyann, is that we need china in this, as we talked about with wesley clarke earlier. and we need people who have relationships with china, high-level state-level relationships. aside from a few people in the administration who have been there from the president's first

term, i'm not sure who's going to have -- does john kerry have it to deal with china if he has to? >> i would hope so. he's our secretary of state now. but there's no evidence that this was a burning issue to him when he was in the united states senate. when he ran for president i didn't hear him talk about it as much as he talked about other issues. >> well, to be fair it's all inflamed in the last two weeks. >> that's true. but to keith's point, that's why i would disagree slightly with my friend because it's -- yes, other presidents have had to deal with it, but it's only the last two weeks when they've actually retested their nuclear facilities and made a nuclear strike and the u.n. actually did something -- >> it's a new leader, though. they had a long-time leader who was there for a long time, kim jong il. but now this new guy, his son, we don't know who he is. >> new boss same as the old boss when it comes to -- >> that's literally about all we know. we know he probably is the son of kim jong il. >> maybe dennis rodman -- >> they have nuclear capability and they're going to test p. now, the u.n. actually did something uncommonly useful recently, which is they're the ones that slapped the sanctions on. but in australia they had a report that south korea may in

fact be planning to make a pre-emptive strike. they'll be ready to go against north korea, which is good news. but this is a serious issue. and i don't like the fact that i sometimes feel like the president is too focused on things where he thinks that he can show his compassion rather than his competence because he knows americans look at him as compassionate but not necessarily competent. north korea we need a competent leader. >> this is the guy who took out osama bin laden, most of al qaeda. this is the guy -- >> what's that got to do with nuclear capabilities? >> this is the guy who took out the pirates in somalia. this guy has been competent and strong and resolute in his foreign policy and all across the world, and i don't think you can possibly question that just because this young 29-year-old dictator is -- >> who we have no line of communication with directly. >> we don't know him. >> except for literally our only direct line of communication at this point is dennis rodman. >> yes. and that's -- >> dennis rodman may save the world. >> just to be clear, he's not an official representative. >> that's a good idea. >> he's horrible. john kerry said as a diplomat

dennis rod sman a greman is a g player. >> i predict dennis rodman will save the world. and this is probably my final "kudlow report" ever. keith, kellyanne, thank you so much. you made my job easy. thank you for watching. by the way, tune in to "street signs" 2:00 eastern time every day on this fine network hosted by a pretty good guy and an australian woman. we're back after this. [ male announcer ] there are people who find their own path. and never back down. who believe the american dream doesn't just happen, it's something you have to work for. ♪ we're for those kinds of people. because we're that kind of airline. and we never stop looking for a better way. it's how we've grown into america's largest domestic airline. we are southwest. welcome aboard. we are southwest. how sharp is your business security?o! can it help protect your people and property, while keeping out threats to your operations?

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